Mr. Jawaharlal Nehru had adopted an economic model by making Public Sector and Government as the centre of all economic decision making , which had lost its relevance since 1991 when the Indian economy had opened up its economic barriers to rest of the World. By presenting the Union Budget of 2021, the Hon’ble Finance Mrs. Nirmala Sitaraman had strongly hammered in the final nails on the coffins of once celebrated “Nehruvian Socialist Economy” and gave a rejuvenating vaccine shot on the right arm of the pandemic hit economy of India by targeting Rs. 1.75 Lakhs crores from disinvestment and monetization of assets alone.
Business of Government is not to do any business
The Finance Minister has announced that the government plans to privatise two public sector banks and one general insurance company in FY22, and added that it plans to complete the divestments of BPCL, CONCOR and SCI in addition to the long-awaited divestment of LIC through IPO. The Union Budget is envisioned for complete disinvestment of all the public sector undertaking such as BMEL, Air India, Power Grid Corporation of India, NTPC, North Eastern Electric Power Corporation, REC Ltd, LIC etc and thereby expecting for monetisation of the value of the assets which are locked in the ruins of Socialism. Unveiling the disinvestment /strategic disinvestment policy the budget had proposed for strategic disinvestment of strategic sectors such as Atomic energy, Space and Defense, Transport and Telecommunications, Power, Petroleum, Coal and other minerals and Banking. In these sectors, Public participation shall be kept at bare minimum. Remaining Non-strategic sectors shall be merged or will be converted as subsidiary of other entities. Other remaining entities in Public Sector shall be closed.
The Government is targeting on raising the required funds for igniting the growth of infrastructure growth without burdening the people of India and it is worth to note that the Budget had not proposed for increasing the Income tax slab rates, corporate taxes, imposing CESS etc, which is really a welcome move. The expected fear factor such as COVID Cess, increasing the Tax of long term capital gains on Securities etc had got alleviated as the Government came up with a definite plan for raising the required funds from disinvestment and monetization of the assets. The Government had kept the inflation control in mind while preparing the budget which will help it to control the cost of the products and services.
It is interesting to note that the budgetary allocation for capital expenditure has been increased to Rs 5.54 lakh crore (about 2.5 % of GDP) - an impressive increase of 34.5% compared to this fiscal year. The budget provides a leg up to the national infrastructure pipeline by providing Rs 1.10 lakh crore for expansion of Railways and Rs 1.18 road networks in the country. The Allocation for rural infrastructure fund has been increased to Rs 40,000 crore is also a very innovative one. The budget mainly focuses on increasing the job opportunities by igniting the infrastructural segment and have allocated identified funds for the same, which can fuel the growth of economy for next many years.
Kicking companies out of complex compliance net.
The Budget had proposed to change the definition of small companies under the Companies Act, 2013. Companies with paid up capital upto Rs. 2 Crore and turnover upto Rs. 20 Crores, which will take a large number of companies out of complex compliance net. The budget had also proposed various measures to popularise the One Person Company(OPC) by reducing the residency limits for NRIs from 182 to 120 days. This will help more NRIs to invest in India by relaxing the norms of the OPC. The new measures will help the Start ups and small business to raise more investments towards it from various persons.
Agriculture Infrastructure and Development Cess (AIDC)
Nirmala Sitharaman announced a cess on certain items, including petrol, diesel, gold and some imported agricultural products in an attempt to boost agriculture infrastructure. While proposing the Agriculture Infrastructure and Development Cess (AIDC), Sitharaman also said that care has been taken not to put additional burden on consumers on most items. The said CESS shall not impact the People of India as the said imposition of AIDC on petrol and diesel, the Basic Excise Duty (BED) and Special Additional Excise Duty (SAED) rates have been reduced on them so that overall consumer does not bear any additional burden. Bold reforms in Foreign Direct Investment Norms
Inorder to reach the goal of infrastructural growth, the budget had proposed to increase FDI limit in insurance sector to 74% from 49%, which is aimed to increase the capital inflows to the nation.
A dream reformatory budget.
The budget of 2021 is nothing but an effort to push the wheels of economy to help it rolling by heavily investing on the infrastructural projects. As the Private sector is still shying away from making fresh investments, the Government had step forward to move the economy with well targeted investments in infrastructure and other growth segments. As per various estimates land held by various government agencies is over 5 Lakh hectares, of which, over 160000 hectares are held across various airports, seaports and railways. The budget is proposing for the monetization of the landed assets to unlock its value and use the same for the growth of the nation. Over 1.4 lakh jobs are estimated to be created between March 2019 and March 2021 in various central government departments. The allocation of Rs. 2,23,846 Crore had boosted the Healthcare sector and the allocation of Rs. 35000 Cr for Covid Vaccination expenditure is really commendable. The Government had taken sincere effort to push the wheels of the economy by making a dream budget like this thereby moved the Country a step closer to the $5 Trillion dream economy of Prime Minister Narendra Modi.
BIJOY P PULIPRA LL.B, FCS, IP, RV